Straight Talk with Kids About Money

Guest Post: By Mardee Alvaro

When it comes to a bigger bang for your parenting buck, using lessons rather than messages to teach children about money can produce far better results. Money can be an emotionally charged topic for many adults - partly because of the stress not having enough of it can induce, but also because most of us were raised with money messages rather than money lessons. Consider the following money messages - and what feelings they might invoke:

"How could you have wasted all your birthday money on one purse?"

"Did you blow through your whole allowance already?"

"Joan's son is so successful ... I just heard he bought a summer home in the Hamptons - and did you see the size or his fiancé's diamond?!!"

Messages are subjective, and inherently reflect judgment. Lesson, on the other hand, are objective and neutral in tone. Messages can invoke shame, fear, and guilt. Lessons can empower.

One of the most common money messages that many parents communicate to their children is that a person's paycheck - and the material possessions that it can buy, from mansions to lavish jewelry to luxury cars - is the yardstick of success in life. Wealth = Success. Some parents may - wittingly or not - take that equation one step further: Wealth = Success = Worth. And that "mega-message" can do a number on a child's self-esteem, whether at age fifteen, or forty.

Managing money is a skill - and not an innate one. Teaching children about money is no different than teaching them how to use the stove safely or how to drive a car. But because money is often one a taboo subject, many parents avoid talking about managing finances with their children. And that can be an expensive mistake.

How can you, as a parent, give your children the money lessons they need to survive as fiscally responsible adults?

1. Find teachable moments to give age-appropriate money lessons. Parents of younger children might begin by introducing the concept of choices: "You can buy one Matchbox car - do you like this red one or that blue one?" This process teaches the child that when you choose to buy one, you are choosing not to buy the other. A structured choice between two acceptable options allows children a safe structure in which to learn how to become competent decision- makers. It also teaches how to make spending choices within financially acceptable parameters.

And, at its most basic level, it teaches budgeting. Instead of the red or blue car, Connor might ask for the green tractor, but if the green tractor costs more money, it may be outside of the budgetary limits that Mom has given him. At age 3, Connor might not understand the concept of a budget, per se, but over time, he will learn to spend within parameters based on his choices.

2. Teach, guide, coach ... but don't do it for them.One of the most powerful parenting tips, particularly when it comes to money, is embodied in the Chinese proverb, "Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime." As your children get older, teach them how to earn, spend and save wisely. Don't tell them how to do it, or worse yet, do it for them.

3. Help, but don't enable. As children move from teen to early adult years, use the financial life-raft judiciously. If, every time Shannon needs money, Dad sends a check for $1,000, Shannon will never learn how to navigate the financial tides on her own.

4. Be careful to give money lessons - not money messages.While many people use the terms wealth and success interchangeably, they really are two distinct measures. As children develop into teenagers and then young (and even not-so-young) adults, this is perhaps one of the most important divider between helpful and detrimental parental input. Let's say your son Jim becomes a doctor, and decides to donate his time and talents to provide services to residents of underdeveloped countries - or to disadvantaged patients right here at home. Will you consider Jim any less "successful" than your niece Nancy, who instead choose to focus her energies on a high-profile (and higher-paying) position at a major medical centers?

The messages and lessons that parents pass on to their children have their roots in early childhood, with lifelong ramifications. From early on, it's important for parents to talk with their children about money, and teach them in a prudent, non-judgmental way to make wise choices. Instead of dollars and cents, think dollars and SENSE!!!

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Mardee Alvaro is the managing editor of a website focusing on state and local municipal matters, and is the mother of two teenagers.